EFFECT OF VALUE ADDED TAX ON NIGERIA ECONOMY GROWTH

ABSTRACT This study examinex the effect of Volue Added Tax (VAT) on economic growth in Nigeria, focusing on its role in revemie generation and is impact on the Gross Domestic Product (GDP) The specific objectives include axsexsing the effect of VAT on revenue generation and determining its influence on Nigeria's GDP A quantliative research design was emploved, utilizing the Ordinary Least Squares (OLS) method for analysis. This approach is suitable for providing Best Linear Unbiased Estimation (BLUE) of the relationships among the variablex studied. The population includes all economic activities subject to VAT in Nigeria, and a random sampling technique was employed to narrow down from 939 mamifacturing sectors to a sample of 10. Data collection was primarily secondary, sourced from the Central Bank of Nigeria (CBN) Statistical Bulletins. Federal Inland Reveme Service (FIRS) Reports, and the National Bureau of Statistics (NBS) The analysis revealed a significant pusitive correlation between VAT revenue and GDP indicating that increased VAT revenue is associated with economic growth. The findings suggest that VAT has become a crucial component of Nigeria's tax system contributing between 406% and 41.6% to total tay revenue across various years. The study concluded that VAT ix a critical fiscal tool that not only enhances revenue generation but also stimulates vorm growth in Nigeria.